Tca v. The Deputy Commissioner Of Income Tax

The Honourable Mr.Justice T.S.SIVAGNANAM The Honourable Mr.Justice N.SATHISH KUMAR Tax Case Appeal Nos.880 & 881 of 2018 & CMP.No.21478 of 2018 M/s.Dun & Bradstreet Technologies& Data Services Pvt. Ltd. (formerlyD & B TransUnion Analytic & Decision Services Pvt. Ltd.), Chennai-96...Appellant The Deputy Commissioner of Income Tax, Corporate Circle 1(1), No.121,Mahatma Gandhi Road, Chennai-34....Respondent APPEALS under Section 260A of the Income Tax Act, 1961against the common order dated 25.11.2016 made in ITA Nos.1257 &1258/Mds/2016 on the file of the Income Tax Appellate TribunalMadras 'C' Bench respectively for the assessment years 2007-08and 2010-11 against separate orders of the Commissioner ofIncome Tax(Appeals 1) Chennai dated 03.02.2016 for assessmentyears 2007-2008 & 2010-2011 in I.T.A. No. 607/13-14/A1(NewNo.I.T.A. 157/CIT(A)-1/2013-2014 against order dated 27.01.2014of Assistant Commissioner of Income Tax, Company Circle I, (4)(i/c) Chennai for PA/GIR No. AACCD5293M. COMMON JUDGMENT These appeals by the assessee under Section 260A of theIncome Tax Act, 1961 (hereinafter called the Act) are directedagainst the common order passed by the Income Tax AppellateTribunal (for short, the Tribunal), Chennai in ITA.Nos.1257 and1258/Mds/2016 dated 25.11.2016 for the assessment years 2007-08and 2010-11. 2. The assessee has filed these appeals by raising thefollowing substantial questions of law: https://hcservices.ecourts.gov.in/hcservices/ “TCA.No.880 of 2018 : i. Whether in law, the Tribunal wasright in remanding the issue of deductionunder Section 10A of the Act back to thefiles of the respondent to once againexamine the issue in the light of CBDTCircular No.1 of 2013 without appreciatingthat the said exercise has already beenundertaken by the respondent vide orderpassed under Section 143(3) read withSection 254 dated 27.1.2014 pursuant to theorderpassedbytheTribunalinITA.No.907/Mds/2013 ? And ii. Whether, in law, the order of theTribunal suffers from perversity as it hasignored the factual finding of the AppellateAuthority in ITA.No.157/ 2013-14 dated03.2.2016 wherein it is specifically heldthat there is no splitting up andreconstruction as contemplated in CBDTcircular No.1 of 2013 and as such, theimpugned order of the Tribunal once againremanding the issue to re-examine the verysameaspectisunwarrantedandunsustainable? TCA.No.881 of 2018 : i. Whether in law, the Tribunal wasright in remanding the issue of deductionunder Section 10A of the Act back to thefiles of the respondent to examine the issuein the light of CBDT Circular No.1 of 2013without appreciating that the said exercisehas already been undertaken by therespondent vide order passed under Section143(3) read with Section 92CA dated10.3.2014 ? and ii. Whether, in law, the order of theTribunal suffers from perversity as it hasignored the factual finding of the AppellateAuthority in New ITA.No. 43/CIT(A)-1/2014-15dated 03.2.2016 wherein it is specificallyheld that there is no splitting up andreconstruction as contemplated in CBDTcircular No.1 of 2013 and as such, theimpugned order of the Tribunal once againremanding the issue to re-examine the verysameaspectisunwarrantedandunsustainable?” 3. We have heard Mr.SP.Chidambaram, learned counselappearing for the appellant/assessee and Mrs.R.Hemalatha,learned Senior Standing Counsel accepting notice for theRevenue. 4. The Tribunal, by the impugned common order, remanded thematters back to the Assessing Officer to examine the case of theassessee in the light of Circular No.1 of 2013 issued by theCentral Board of Direct Taxes (CBDT) and decide the same aftergiving due opportunity to the assessee. TCA.No.880 of 2018 : 3. We have heard Mr.SP.Chidambaram, learned counselappearing for the appellant/assessee and Mrs.R.Hemalatha,learned Senior Standing Counsel accepting notice for theRevenue. 4. The Tribunal, by the impugned common order, remanded thematters back to the Assessing Officer to examine the case of theassessee in the light of Circular No.1 of 2013 issued by theCentral Board of Direct Taxes (CBDT) and decide the same aftergiving due opportunity to the assessee. TCA.No.880 of 2018 : 5. This is the second round of litigation before theTribunal. In the earlier round, the Revenue was aggrieved by theorder passed by the Commissioner of Income Tax (Appeals)deleting the disallowance of deduction under Section 10A of theAct. The Tribunal, by order dated 31.7.2013, remanded the matterback to the Assessing Officer to re-examine the claim, as theRevenue placed reliance on the said Circular. The operativeportion of the order dated 31.7.2013 reads as follows : “We have examined the rival contentions and gone through thecase file. In our view, the Commissioner of Income Tax (Appeals)has not granted opportunity to the Assessing Officer beforeallowing the assessee's claim in view of the circular, whichstipulates that factual issue requiring verification of factshave to be examined i.e. details of slump sale, its nature,etc. In our opinion, the Commissioner of Income Tax (Appeals)should have opted for an open remand to the Assessing Officerregarding the issue before us. Therefore, by modifying the orderof the Commissioner of Income Tax (Appeals) to this extent, wedirect the Assessing Officer to re-examine the claim in view ofthe 'circular' in accordance with law after affording adequateopportunity of hearing to the assessee.” 6. In fact, in the above referred to order, the Tribunalrecorded that the CIT(A) had not granted an opportunity to theAssessing Officer before allowing the assessee's claim in viewof the said Circular, which stipulated that the factual issuerequiring verification of facts had to be examined i.e. detailsof slump sale, its nature, etc. The Assessing Officer heard theassessee and passed the giving effect to order dated 27.1.2014.In paragraph 3 of the order, the Assessing Officer mentionedabout the direction issued by the Tribunal. In paragraph 5.2 ofthe order, there had been a reference to the said Circular ofthe CBDT. The Assessing Officer directed the assessee to producecertain documents, which were enumerated in paragraph 5.3 andultimately found that the transaction was construed as a meresplitting up and reconstruction of business. 7. Aggrieved over the same, the assessee preferred an appealbefore the CIT(A), who recorded in paragraph 4 of his orderdated 03.2.2016 about the directions issued by the Tribunalwhile remanding the matter to the Assessing Officer and inparticular, with reference to the said Circular of the CBDT. Thediscussion starts from paragraph 14 of the order. Ultimately,the CIT(A) concluded that there was no discrepancy in the valueof the assets transferred through slump sale by the transferorcompany to the assessee and since the entire assets of theundertaking were found to have been transferred to the assesseeon lock, stock and barrel basis, there was no case for splittingup or reconstruction as mentioned by the Assessing Officer.Therefore, the Assessing Officer was directed to delete thedisallowance made under Section 10A of the Act. On the abovegrounds, the appeal filed by the assessee was allowed. 8. Aggrieved by that, the Revenue filed an appeal before theTribunal and on perusal of the grounds of appeal, we find thatonce again, the Revenue contended that the said Circular of theCBDT was not taken into consideration. The Tribunal, by theimpugned order, took note of the submissions made earlier onbehalf of the Department for the assessment year 2009-10 andremanded the matter to the Assessing Officer to take note of thesaid Circular of the CBDT. 9. In our considered view, in the earlier remand, theAssessing Officer, while passing the giving effect to order,noted the said Circular and assigned certain reasons as to whythe disallowance has to be made. The correctness of that order,while being tested by the CIT(A), he had noted the said Circularand given independent reasons as to how the assessee's case isacceptable. Thus, in our considered view, the Tribunal shouldhave considered the correctness of the order passed by the CIT(A), as already the effect of the said Circular was consideredby both the Assessing Officer and the CIT(A). 10. It may be true that the operative portions of the orderspassed by both the Assessing Officer and the CIT(A) do notcontain any mention about the said Circular. In effect, theparameters required to be examined by the Assessing Officerunder the said Circular were examined and in the opinion of theAssessing Officer, the case of the assessee cannot be accepted.This was reversed by the CIT(A). Therefore, the Tribunal canvery well decide the correctness of the order passed by the CIT(A) instead of remanding the matter to the Assessing Officer fora fresh consideration, as, already, such an exercise was done bythe Assessing Officer. Furthermore, the order of remand passedfor the assessment year 2009-10 is now pending before theDispute Resolution Panel. Therefore, in the fitness of things,it is for the Tribunal to decide the matters, since this issuearises in the first year, which is the assessment year under consideration namely 2007-08. 11. For the above reasons, TCA.No.880 of 2018 filed by theassessee is allowed and the order passed by the Tribunal is setaside. The Tribunal is directed to decide the matter on meritsand in accordance with law. The substantial questions of law areleft open. No costs. TCA.No.881 of 2018 : 12. In so far as TCA.No.881 of 2018 is concerned, it is forthe assessment year 2010-11 and an identical order has beenpassed as impugned in TCA.No.880 of 2018. Therefore, TCA.No.881of 2018 is also allowed on the same lines and the Tribunal isdirected to take a decision on merits. The substantial questionsof law are left open. No costs. Consequently, the connected CMPis closed. s/d- Assistant Registrar(CS-III) True Copy Sub-Assistant Registrar To 1.The Income Tax Appellate Tribunal, Chennai 'C' Bench.2.The Deputy Commissioner of Income Tax, Corporate Circle 1(1),No.121, Mahatma Gandhi Road, Chennai-34.3. The Assistant Commissioner of Income Tax Company Circle 1(4)(i/c) Chennai. +2 Ccs to Mr.T.Ravi Kumar, Advocate sr 84883. KAN(CO)SP(09/05/2019) TCA.Nos.880 & 881 of 2018And CMP.No.21478 of 2018